Guidelines to Consider When Setting Allowances

Claudia Miller

Published
4:00 am PST, Friday, December 29, 2000

They are some of the trickier questions parents of elementary-school-age children face. How much allowance is fair? Do you give what your child's best friend gets? How much should you give other children in the family? How much can you afford to give?

-- How much? Many parents base allowance on the child's age, giving a dollar or 50 cents per year. Others give $1 per grade, with increases each September. Still others pick an arbitrary amount, such as $5, and all the children in the family get the same amount. According to David McCurrach, who wrote and published "Kids' Allowances," and "The Allowance Workbook for Kids and Their Parents," the average allowance for children between 6 and 10 years old is $5.

-- A contract: McCurrach suggests parents create an annual allowance agreement that includes how much money will be given and how it can be spent. "Parents need to think about why they're giving their children a weekly allowance: Is it for candy and trading cards? Or will they pay for the movies, new CDs and friends' birthday gifts?" he said. "Once you've figured out how it can be spent, how much do you want them to save or give to charity? All of these factors need to be added into the allowance budget."

-- Matching funds: Some parents also agree to match their children's savings. For example, if a child is saving for a scooter or other expensive toy of the moment, the parent may offer to double the savings after a certain amount is reached. "By sitting down with your child and talking about where the money can be spent and how it can be saved, you cut down on all the 'Can I have $1 for a soda?' that really wears down parents," McCurrach said. "Once parents give up that control of money, it reduces the stress between the parent and child. By the time children get into high school, they're facing more complex decisions about money and personal finances, and they already have some of the skills they need."

-- Clothing budget: Often, by the time children reach middle school, parents may give their children an additional clothing allowance. Some parents give their children a set amount of money at the beginning of each month, or four times a year and let them make their own clothing choices. There should also be ways for children to earn more money if they want, by doing extra chores around the house, such as washing the car or weeding the garden.